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Brief Exercise 8-5 Skysong, Inc. uses the percentage-of-receivables basis to record bad debt expense and concludes...

Question

Brief Exercise 8-5 Skysong, Inc. uses the percentage-of-receivables basis to record bad debt expense and concludes...

Brief Exercise 8-5 Skysong, Inc. uses the percentage-of-receivables basis to record bad debt expense and concludes that 4% of accounts receivable will become uncollectible. Accounts receivable are $376,600 at the end of the year, and the allowance for doubtful accounts has a credit balance of $2,872. (a) Prepare the adjusting journal entry to record bad debt expense for the year. (b) If the allowance for doubtful accounts had a debit balance of $961 instead of a credit balance of $2,872, prepare the adjusting journal entry for bad debt expense. (Credit account titles are automatically indented when amount is entered. Do not indent manually. No. Account Titles and Explanation Debit Credit

Brief Exercise 8-5 Skysong, Inc. uses the percentage-of-receivables basis to record bad debt expense and concludes that 4% of accounts receivable will become uncollectible. Accounts receivable are $376,600 at the end of the year, and the allowance for doubtful accounts has a credit balance of $2,872. (a) Prepare the adjusting journal entry to record bad debt expense for the year. (b) If the allowance for doubtful accounts had a debit balance of $961 instead of a credit balance of $2,872, prepare the adjusting journal entry for bad debt expense. (Credit account titles are automatically indented when amount is entered. Do not indent manually. No. Account Titles and Explanation Debit Credit

Answers

Answer

--Required journal entries

No Accounts title Debit Credit
[a] Bad Debt Expense $12,192
   Allowance for doubtful accounts [ ($376600 x 4%) required - $ 2872 already existing] $12,192
(to record bad debt expense
[b] Bad Debt Expense $16,025
   Allowance for doubtful accounts [ ($376600 x 4%) required + $ 961 DEBIT already existing] $16,025
(to record bad debt expense


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